Matt Wilcox Pro

Hi. I’m Matt and I’m a Millennial.

(The group responds: Hi Matt!)

These days bankers spend a lot of time analyzing Millennials, which is to say, people between the ages of 18 to 37. (Or it is 22 to 38? 20 to 36? No one seems to agree.) And no wonder. We are digital banking’s immediate future. And we are raising digital banking’s future’s future.

Many observations about Millennials are well defended. The numbers indeed seem to show we’re quicker to adopt new technologies, more open to new ideas, and a little more flexible when it comes to letting people do their own thing. On the other hand, we seem to be marrying, buying homes, and having children later in life than our parents did. 

(Marketers might want to note that according to a Pew Research study reported by TIME, some of us aren’t terribly fond of being called Millennials. Brandish the M-word at your own risk.)

Fiserv’s Experiences and Expectations quarterly consumers trends surveys have repeatedly shown that Millennials lead the charge when it comes to adopting digital banking products. And American Bankers Association says that we Millennials are three times more likely to open an account on a smartphone than in person, and that if you offer digital services you’ll be “better positioned” to engage us. (ABA also says we’re going to inherit some $30 trillion over the next three or four decades. One can only hope.)

Some characterizations are less flattering. According to LiveScience staff writer Douglas Main, Millennials have been …

… described as lazy, narcissistic and prone to jump from job to job. The 2008 book Trophy Kidsby Ron Alsop discusses how many young people have been rewarded for minimal accomplishments (such as mere participation) in competitive sports, and have unrealistic expectations of working life.

Adding insult to injury, a 2015 Mintel study as reported in the New York Times alleged that …

Almost 40 percent of the millennials … said cereal was an inconvenient breakfast choice because they had to clean up after eating it.

Which explains why in the above-referenced piece in TIME added,

It’s not hard to understand why some Millennials might want to distance themselves from an identity that has often been equated with being self-absorbed, whiny and spoiled.

Thank you, TIME. And to TIME’s point, I for one do not shy from cold cereal merely because cleanup follows. Nothing will ever come between me and my Honey Nut Cheerios.

It has always been fashionable for older generations to lament the habits of the rising one. Writing for Huffington Post, author Michael Hobbes, self-described as “35 years old—the oldest millennial, the first millennial,” suggests that psychographic descriptors applied to millennials are trivial, and in any case may result from external factors:

What is different about us as individuals compared to previous generations is minor. What is different about the world around us is profound. Salaries have stagnated and entire sectors have cratered. At the same time, the cost of every prerequisite of a secure existence—education, housing and health care—has inflated into the stratosphere. From job security to the social safety net, all the structures that insulate us from ruin are eroding. And the opportunities leading to a middle-class life—the ones that boomers lucked into—are being lifted out of our reach. Add it all up and it’s no surprise that we’re the first generation in modern history to end up poorer than our parents.

All of which may be useful to keep in mind when making marketing decisions based on how Millennials think and act. Despite the acknowledged, numbers-supported differences above, perhaps there is no one way that Millennials think and act. In a recent piece for Medium, independent author Zhivko Illeieff warns that…

After three decades of commercializing, sensationalizing, and whitewashing the millennial generational narrative, modern society has little to show for it other than consultancy fees, sponsored think pieces, and viral videos about millennials’ work habits.

Humans are prone to characterize groups they’re not part of, usually not in the most flattering of terms. Such has had disastrous results throughout history. In terms of marketing, failing to take a critical look at wide-swath characterizations may lead to lost opportunities and missteps. When it comes to sweeping generalizations, caution is always advised.

A recent Fiserv survey confirms—among other insights—that trust remains a primary driver behind the public’s preference for bona fide banks over non-bank alternatives. Which is why I wish to draw attention to the first runner-up on Reputation Institute’s latest list of America’s most reputable retailers: 

Second only to Barnes & Noble was none other than Amazon.

Amazon, as you likely already know, shows up in the news from time to time for its habit of upheaving every industry it touches. And it already has a good deal more than a toe in the financial services industry—with no regard, as American Banker points out, for trivialities the likes of securing a charter: 

Who needs a banking charter, anyway?

Not Amazon. The most feared company in America keeps finding new ways to eat into banks’ revenues, even though it is supposedly on the wrong side of the industry’s regulatory moat.

The e-commerce giant is already making small-business loans, finding ways to cut into banks’ swipe-fee revenue, and competing against prepaid card issuers.

American Banker went on to say that … 

… several recent developments suggest that Amazon has substantially broader ambitions. Checking accounts, small business credit cards and even mortgages all appear to be in the company’s sights.

And The Wall Street Journal reported earlier this year:

Amazon.com Inc. is in talks with big banks including JPMorgan Chase & Co. about building a checking-account-like product the online retailer could offer its customers, according to people familiar with the matter.

(Chase, Capital One, and Amazon did not comment on what “people familiar with the matter” had to say.)

While the banking industry is no stranger to competitive threats, Amazon poses a competitive threat well out of the ordinary. Tearsheet recently reported:

The idea of a “Bank of Amazon” was the first of 10 trends to watch in financial services over the next year … Amazon knows how to keep people happy. CB Insights data found 86 percent customer satisfaction at Amazon, compared to Citi (82 percent), Capital One (80 percent), “all banks” (80 percent), TD Bank (79 percent), and Bank of America and Chase (each 75 percent). Studies show most millennials would rather bank with the Amazons of the world, Facebook and Google included, than their existing banks.

Presenting a daunting list of financial services that Amazon has already developed in-house, Fast Company warned:

Amazon specializes in creating tech-based ecosystems that generate valuable customer data, like online retail, online video, and the connected home. Once such an ecosystem is established, the company is well positioned to layer on products and services that manage related payments, credit needs, or risk.

Finextra summed up the Amazon threat by quoting Bain & Company partner Gerard du Toit:

“For retail banks, the key lesson is that their main competition consists not of traditional banks, but rather the large technology firms such as Amazon that have upended entire industries,” says du Toit. “Tech firms have already reset customer expectations for what a good experience feels like, and Amazon’s expected entry into core banking heightens the urgency of accelerating work to improve the customer experience, largely by making it simpler and more digital.”

Amazon certainly has the know-how, the reach, and the technology to wreak havoc on the financial services industry as we know it. And as for the crucial matter of trust, last month CNBC reported on a recent Bain & Company survey:

Bain surveyed 6,000 U.S. consumers recently with a simple question: If Amazon launched a free online bank account that came with 2 percent cash back on all Amazon.com purchases, would you sign up to try it?

All else being equal, younger respondents were more likely to answer with yes, according to the survey. Almost 70 percent of those in the 18-to-34 age bracket would try the Amazon account, compared with about 50 percent of those 35 to 54 years old and under 40 percent of those older than 55.

And this warning comes from The Financial Brand’s executive editor Steve Cocheo:

Amazon already offers a quasi-deposit service, credit cards, and business loans. Amazon can turn jars of change into gift cards, and will give your kids their allowance via a reloadable debit feature. At what point do executives in the traditional financial industry concede that Amazon is, in fact, a bank?

Perhaps that’s why CNBC opened the above-referenced article with this ominous lede: “Banks, you’ve been warned.”

Lest I be accused of writing a downer of a post this time around, let me state that what I’m attempting to do is write a motivating post, not a depressing one. Forewarned, as they say, is forearmed. Provided we all get busy.

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published by The Financial Brand.

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Add SSN and stir.

CHANCES ARE that identity fraud appeared the moment that presenting valid ID first became needful. Today’s inflated claims aside, The Balance’s Jack Stroup points out that in early U.S. history fake IDs were used to stuff ballot boxes. Since the advent of the minimum drinking age, underage youth out to purchase alcohol have resorted to ID fraud. And, of course, early credit cards were easy prey. Thanks to chips, today’s cards are less convenient prey but not impervious.

In the good old days, ID fraud involved altering or appropriating the bona fides of a real person. Synthetic ID fraud, which Equifax asserts accounts for over 80 percent of today’s identity fraud, obviates the need for a real person.

All that today’s synthetic ID fraudster needs to get started is patience and a Social Security Account number that passes muster. Among other places, such are bought and sold on the dark web. Best are account numbers rarely or not used, automatically pointing fraudsters toward seniors and, more often, children: a Cylab study reports that “children were targeted 51 times more frequently than adults.” 

An alternative for the fraudster is simply to make up account numbers. Since Social Security numbers are no longer tied to birthplaces but randomly generated, such can sail through as if valid. This can cause complications for anyone to whom the Social Security Administration might later assign that number, a consequence that does not seem to give the average fraudster pause.

Whether the SSN is lifted or fabricated, the fraudster creates a name to go with it. Giving the name weight in the credit world takes time, which is where patience comes in. One method is to apply for credit using the phony ID. The initial application will be declined, but a record of the name and account number will have been placed in credit bureaus’ databases. The phony ID will then show up as a real person on the next credit search, possibly qualifying for credit accounts with small spending caps.

IBM’s SecurityIntelligence lists that and two other ways of giving a synthetic ID weight. One way is to add the new ID as an authorized user of a legitimate account. Another is to create a shell company that extends credit to the ID.

Once the synthesized ID’s gains a foothold, more lines of credit can be obtained and limits raised. When the time is right, the fraudster proceeds with a rapid spending and cash advance spree—and then, of course, disappears without paying.

Not a tiny problem

Forbes’s Alan McIntyre reports that synthetic identity fraud costs …

… banks billions of dollars and countless hours as they chase down people who don’t even exist. That is part of the reason why global card losses have been rising at an average annual rate of 18 percent in recent years, according to Accenture estimates. Synthetic identity theft alone may account for 5 percent of uncollected debt and up to 20 percent of credit losses, or $6 billion in 2016, according to some industry analysts. The problem is even more acute with store credit cards and auto loans.

Detecting synthetic security fraud is frustratingly difficult. Real identities are hidden, making perps nearly impossible to identify. Investopeida reports: 

Sometimes financial institutions can’t even tell that synthetic identity theft has occurred because the criminal will establish a history of using the fraudulent account responsibly before becoming delinquent in order to look like a real person experiencing financial problems and not an outright criminal who racks up charges and becomes delinquent on the account at the first opportunity.

CNBC’s Investor Toolkit page paints no rosier a picture:

When criminals use a blend of different people’s data, as well as some entirely made up information, it becomes harder for law-enforcement officials to both realize the crime and then locate the culprit, said R. Sean McCleskey, a retired United States Secret Service agent who supervised an identity-theft task force for more than a decade. “If you’re using an address you control, the person whose Social Security number you’re using may never be getting the account statements,” he said.

Fighting synthetic identity fraud

On the consumer side, CNBC suggests giving out one’s SSN as seldom as possible, freezing children’s accounts, and keeping tabs on statements and credit reports. On the financial institution side, forewarning and forearming clients with good information is, as always, a best practice. 

Nor are financial institutions entirely defenseless. The major credit reporting agencies and other companies offer AI-esque tools for financial institutions. For that matter, if you will indulge this modest plug for my employer, Fiserv’s VerifyNow service is not to be overlooked.

No sooner did direct marketers commence salivating at targeting opportunities posed by that newfangled Internet thing … than the United States Congress and various regulatory bodies set about passing laws to hamper them. 

Or, at least, that was the idea. Many rules are so plastic as to allow for a good deal of wiggle room—and marketers have proved adept wigglers since the dawn of time. The CAN-SPAM Act, for instance, forbids “false or misleading” headers; but one person’s “false and misleading” may be another’s “creative and charming.” Or, take retargeting, which provides a neat circumvention of rules against emailing website visitors without their express permission. Though it’s perfectly legal, a growing number of consumers are creeped out when ads for a recently searched product suddenly show up wherever they look.

The wisest course for building an online database has always been simply to request data along with permission to use it. Since people rarely give up something for nothing, marketers often dangle a compelling offer in exchange for data and permission. The offer is usually some sort of downloadable file—a document, music, video, images, etc.—or sometimes a non-downloadable incentive that requires shipment.

But SHIRU CAFE, a three-year-old Japanese company, has found a way to deliver a non-downloadable incentive on-the-spot in exchange for data. 

SHIRU CAFE is at once a coffee shop and a gatherer and marketer of data. 

If you’re a student at Brown University in Providence, Rhode Island, SHIRU is a coffee shop—but your money is no good there. The price for a cup of coffee at SHIRU is your personal data. According to NPR’s “The Salt” …

To get the free coffee, university students must give away their names, phone numbers, email addresses and majors, or in Brown’s lingo, concentrations. Students also provide dates of birth and professional interests, entering all of the information in an online form. 

Faculty can pick up a cup of Joe for a dollar. Tough luck if you’re neither a student nor faculty member. You’ll have to go someplace else and pony up.

If you’re a corporate sponsor, SHIRU is a gatherer and marketer of data. Sponsors, if you were wondering, pay for the coffee by purchasing the data. Students who participate, continues NPR,

… open themselves up to receiving information from corporate sponsors who pay the cafe to reach its clientele through logos, apps, digital advertisements on screens in stores and on mobile devices, signs, surveys and even baristas.

It doesn’t take much imagination to understand the value marketers might place on that information. Financial institutions, for instance, could use it to identify students likely to someday prove valuable clients.

There’s no deception or sleight-of-hand going on. SHIRU is up-front about why they want students’ data and how they plan to share it.

As you’d expect, some find the idea distressing. Two Brown students recently called for a boycott. Others have set to work envisioning the worst and writing about it. 

But come on. College students are big kids. Moreover, no one is forcing their participation. There’s an arguable win-win here, since database marketing is about matching marketers with more-likely prospects, and vice-versa.

Though the Providence café is SHIRU’s only U.S. store and hasn’t yet landed a sponsor, SHIRU operates a number of other profitable, corporate-sponsored cafés in Japan and India.

I’ll be interested to see if the concept grows in the U.S. If it does, expect knock-offs. It would be an easy matter for Starbucks or another chain to offer students coffee in exchange for data. Such would have an easy jump on SHIRU, since in the U.S. you can throw a textbook and hit three Starbucks stores.

For that matter, perhaps a bank looking to capture rising generations might strike a deal with coffee houses near college campuses, offering students free coffee on showing proof-of-account. Although many bank lobbies already make coffee available, a bona fide coffee house presents cachet—and an aura of quality—that no bank lobby can approach. Besides gathering data, a coffee house program would provide an incentive for students to open an account.

Surely there are other possibilities. Perhaps I’ll think of more. But first I’m going to need another shot of caffeine.